Oceaneering International NYSE: OII reported first-quarter 2026 results that management said were consistent with prior guidance, as strength in its Aerospace and Defense Technologies segment offset softer energy-related activity. Executives also highlighted roughly $1 billion of first-quarter order intake—one of the company’s strongest quarterly intakes since 2020—while noting modest operational disruption tied to ongoing conflict in the Middle East.
First-quarter results track guidance as ADTECH grows
President and CEO Rod Larson said the company generated consolidated revenue and adjusted EBITDA “consistent with our guidance” and saw “strong commercial momentum” from new awards and contract extensions. He pointed to significant year-over-year growth in Aerospace and Defense Technologies (ADTECH) revenue, while Subsea Robotics (SSR) and Manufactured Products also increased revenue year over year despite “softer energy sector activity.”
Senior Vice President and CFO Mike Sumruld said first-quarter revenue was $692 million, up 3% from the prior-year quarter. Operating income was $57.8 million, down 21%, while net income was $36 million, or $0.36 per share, down 28%. Adjusted EBITDA was $83.7 million, down 13%.
Sumruld said the year-over-year comparisons were “materially impacted” by what he described as a record first quarter in 2025 for the Offshore Projects Group (OPG).
Cash flow, liquidity, and buybacks
Sumruld said Oceaneering used $59.1 million of cash for operating activities, “largely for payment of performance-based incentive compensation and increased customer receivables.” The company invested $17.4 million in organic capital expenditures, with about 54% directed to growth and 46% to maintenance.
Free cash flow was negative $76.5 million, which Sumruld said was an improvement of $30 million compared to the first quarter of 2025. Oceaneering ended the quarter with $607 million in cash and $215 million available under its secured revolving credit facility, for total liquidity of $822 million.
On capital returns, Sumruld said the company did not repurchase shares in the first quarter due to “heightened market volatility tied to the Middle East conflict and the resulting swings in our share price.” He said Oceaneering would continue to evaluate buybacks as the year progresses.
Segment performance: utilization, pricing, and contract items
Subsea Robotics (SSR): Sumruld said SSR operating income was $55.5 million, down 7%, despite higher revenue. He noted that average ROV revenue per day utilized rose to $12,401 from $10,788, citing improved pricing and “discrete first quarter items” that boosted revenue but were not expected to recur. These included mobilizations that contributed revenue without corresponding ROV days utilized and a discrete cost-reimbursement scope that added revenue with minimal margin.
SSR EBITDA margin declined to 32% primarily due to lower utilization, which fell to 61% as activity softened in drill support and vessel services. Sumruld also cited a shift toward lower-profitability regions and costs to prepare the Ocean Intervention II for operations, along with investment in the Freedom vehicle ahead of defense customer trials. Management said it expects SSR margins to rebound in the second quarter as utilization increases in ROV and survey work.
As of March 31, Oceaneering had ROV contracts on 83 of the 143 floating rigs under contract, representing 58% market share, and maintained a fleet of 250 ROV systems.
Manufactured Products: Revenue rose 6%. Operating income was $26.1 million, or 18% of revenue, which Sumruld said was up 37% excluding a $10.4 million theme park ride inventory reserve recorded in the first quarter of 2025. He said results benefited from receiving steel tubes “but at no margin,” while operating income improved on execution of higher-margin backlog and strong performance in the Rotator valves business.
Backlog was $492 million as of March 31, down $51 million year over year, and the segment’s book-to-bill was 0.91. Sumruld characterized the business as “lumpy” but said the company had not seen a change in underlying demand and expected backlog to rebuild as projects move to award.
Offshore Projects Group (OPG): Revenue was $135 million and operating income was $18 million, yielding a 14% margin. Sumruld said results declined versus last year as activity returned to more typical seasonal levels after a record first quarter in 2025, though favorable project mix helped offset lower activity.
Integrity Management and Digital Solutions (IMDS): Sumruld said revenue, operating income, and margin decreased due to lower activity in West Africa and Australia, with Australia impacted by the company’s decision to exit a low-margin contract. He said the company had expected growth in the Middle East based on recent contract awards, but conflict-related activity decline resulted in regional results that were “essentially flat” year over year.
ADTECH: Revenue rose to $131 million, driven by higher volumes in Oceaneering Technologies (OTECH) and the Marine Services Division (MSD). Sumruld said OTECH growth was tied to a large contract awarded in 2025 that is “progressing on schedule,” while MSD improved due to increased submarine maintenance and repair work and more dry deck shelter overhauls.
ADTECH operating income and margin decreased mainly due to a net $5.5 million accrual tied to the expected resolution of a previously disclosed contract dispute. Sumruld said the agreement is subject to final approval, but the company expects it will resolve the matter and allow the team to focus on execution, with the obligation anticipated to be settled over the life of the multi-year contract.
Orders, technology updates, and Middle East impacts
Larson said first-quarter order intake was approximately $1 billion and described the resulting book-to-bill as “constructive.” He said SSR awards totaled around $300 million, including projects extending to 2031, which he said improves visibility into utilization levels. Larson also said the company secured multiple survey contracts for the Ocean Intervention II that should keep the vessel highly utilized for the next three quarters.
In ADTECH, Larson said the segment added about $175 million in new awards, exercised options, and increases to existing contract values. He also highlighted delivery of the U.S. Navy’s submarine rescue diving and recompression system following a multi-year rebuild and recertification.
On technology, Larson reiterated that Oceaneering introduced Momentum, a next-generation electric work-class ROV, and expects to mobilize it on a U.S. Gulf vessel in the second quarter. He said the company continues to develop its autonomous systems portfolio, including the Freedom platform, with one commercial unit currently operating in West Africa and a specialized Freedom vehicle moving toward testing and customer demonstration for the Defense Innovation Unit.
Addressing the Middle East conflict, Larson said all employees in the region were “accounted for and safe.” He said the company has seen intermittent disruption, though “the consolidated financial impact has thus far been modest,” and noted IMDS has the greatest exposure and has been most affected.
Guidance reaffirmed; second-quarter EBITDA outlook raised sequentially
For the second quarter, Larson said Oceaneering expects sequential improvement, forecasting consolidated EBITDA of $100 million to $110 million and higher revenue versus the first quarter. Segment expectations included increased SSR revenue with flat operating income due to geographic mix and higher survey activity; mid-single-digit percentage increases in Manufactured Products revenue and operating income; flat OPG revenue with lower operating income on lower utilization and a mix shift toward lower-margin IMR work; and lower IMDS revenue and operating income due to activity declines in West Africa and Australia, with Middle East activity described as uncertain.
Larson said the company is reaffirming full-year 2026 guidance for low- to mid-single-digit revenue growth and EBITDA of $390 million to $440 million, while acknowledging Middle East uncertainty. He said the company anticipates an acceleration in energy market activity in the second half of the year, and suggested OpEx-oriented work could be pulled forward if customers move quickly.
During Q&A, Larson said he did not see a clear order “inflection point” tied to the Iran conflict, but noted a shift toward longer-duration SSR awards, averaging above one year with some contracts extending to five years. He also said seasonality and expected higher vessel activity in the second and third quarters support the company’s confidence in mid-60% ROV utilization for the full year.
Discussing profitability by region, Sumruld said SSR margins in the North Sea and Brazil “tend to trail” the Gulf of Mexico and West Africa, and management expects the geographic mix to shift back toward higher-margin regions later in the year. Larson added that intervention and well remediation-related work is typically higher margin than less differentiated IMR activity.
On capital deployment, Larson said the company continues to prioritize organic growth, potential inorganic growth, and shareholder returns, and noted that as ADTECH increasingly acts as a prime contractor, Oceaneering is seeing potential acquisition opportunities among partners it works with.
About Oceaneering International NYSE: OII
Oceaneering International, Inc is a global provider of engineered services and products primarily to the offshore oil and gas industry, as well as to aerospace, defense, and commercial diving markets. The company specializes in remotely operated vehicles (ROVs), subsea intervention, and inspection services designed to support exploration, production and maintenance activities in challenging underwater environments. In addition to ROV operations, Oceaneering offers asset integrity solutions, specialized tooling, and intervention equipment for pipelines, risers, and flowlines.
Founded in 1964 and headquartered in Houston, Texas, Oceaneering has grown through both organic expansion and strategic acquisitions.
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